Northwest - How Much of this Bankruptcy is Debt Service?

BrooklynDodger wonders how much of the bankruptcy at Northwest stems from the 1980’s leveraged buy-out. That buy-out generated 3.6 billion in debt, something carried forward to today.

So 8 billion in debt, at 5%, generates 400 million in interest, not to mention what the lenders want in principle back. With principle repayments, that gets us up into the realm of the labor cost reduction Northwest is asking for.

Bankruptcy means the lenders have to take a hit as well.

Monday, August 29, 2005
Northwest to seek new concessions from pilots, union says
MINNEAPOLIS (AP) -- Union pilots at Northwest Airlines Corp. are getting ready for a second round of bargaining and expect management to demand $322 million in new concessions, a union official says.
The cuts would come on top of a 15 percent pay reduction the pilots accepted in December, said Mark McClain, chairman of the Northwest branch of the Air Line Pilots Association.
A strike by Northwest mechanics, custodians and cleaners -- who are refusing concessions that would save the airline $176 million a year -- entered its 10th day Monday.
…
Northwest has been losing about $4 million per day and is weighed down by about $8 billion in long-term debt. So even though the pilots are not yet engaged in formal negotiations, their leaders have been meeting with Northwest managers to talk numbers.
…The airline's executives say they want to reduce Northwest's annual labor costs by at least $1.1 billion.

…The Professional Flight Attendants Association returns to the bargaining table Tuesday, and its members are being asked for $143 million in concessions. Northwest says it wants to cut their pay by an average of 20 percent.
The International Association of Machinists and Aerospace Workers, which represents ground workers, is in mediated talks, and Northwest is seeking $107 million in annual cost savings from that union.